State repeating costly errors of secrecy, debts in SGR extension to Malaba

Despite the heavy debt burden and public criticism generated by the initial phases of the Standard Gauge Railway (SGR), the government could be repeating the errors with the Sh700 billion extension of the railway to Kisumu and Malaba.

A dual leadership structure dominated by the State and the China Road and Bridge Corporation (CRBC) is seen to sideline key stakeholders, leaving the public and oversight bodies groping in the dark over procurement and contract terms in what mirrors what happened about a decade ago at the inception of the project.

The implementation of the Mombasa-Nairobi-Naivasha phases continue to stir controversy to this day owing to minimal disclosures about the project but also how CRBC and government implemented the project on completion and the impact it had in growing the country’s debt.

A June 2026 report by Transparency International (TI) Kenya says that while the SGR was a brilliant concept at inception during Mwai Kibaki’s regime and started implementation during Uhuru Kenyatta’s tenure, opaqueness and governance concerns have consistently been its Achilles' heel.

The government appears to be relying on the same script of non-disclosure for the Naivasha–Kisumu–Malaba extension.

Following a fact-finding mission to the SGR termination point in Suswa, Narok County, in January 2026, TI Kenya rated the SGR as Kenya’s most vulnerable infrastructure project for corruption, scoring 4.49 out of five, which the organisation categorised as high risk.

“Poor governance and corruption hijacked this particular project," the TI report noted in reference to the initial phases but also pointing to weak grievance mechanisms, limited disclosure of full project costs and opaque procurement in the plans to extend the railway to Malaba.

"Claims remain that key contracts related to SGR remain secret, procurement procedures in many instances disregarded, and there was inadequate public participation.”

TI Kenya attempted to seek clarity on contractor beneficial ownership, audit reports and feasibility studies from state entities including the National Treasury and the Transport Ministry through a Right of Access to Information Request.

It however noted that by March 2026, no substantive or timely information was provided.

“Governance failures and corruption concerns—including secrecy of contracts, procurement irregularities, and inadequate public participation—created very high corruption risks, for the SGR project subverting its intended purpose of propelling inclusive development, regional trade and economic transformation,” said TI in the report.

There are already petitions filed to make the government disclose how it is going to fund the Naivasha-Kisumu-Malaba extension but also one that is seeking the removal of Kenya Railways managing director for the failures witnessed in the execution of the initial phases that saw the railway reach Naivasha.

The extension to Kisumu and Malaba broke ground in March this year. Last week, Kenya Railways and other government agencies oversaw the commencement of construction works.

“The Naivasha–Kisumu–Malaba SGR extension is more than just a railway, it is a symbol of Kenya’s commitment to regional integration, economic transformation, and sustainable development,” said Kenya Railways managing director Phillip Mainga, adding that once complete, the railway would ease cargo movement in the region and further entrench Kenya as a gateway to the region while providing long term benefits for counties along the railway route.

This is even as he urged landed owners and others affected by the project work with government agencies, assuring transparency in land valuation and compensation.

He also said the project would be delivered responsibly “balancing the need for timely infrastructure development with the protection of the rights and interests of every affected person”.

But as it gets started, Kenya railways has to contend with the decade long controversies surrounding the Mombasa–Nairobi–Naivasha SGR, which was mired in legal disputes and has been challenged in court throughout the years.

Among the most contested issues has been on transparency and the hidden terms of the loans that the China Export-Import Bank advanced to Kenya for the project. The government over the years refused to release the loan documents to the public, which resulted in concerns that it had used the Port of Mombasa as collateral.

The Court of Appeal ordered the state to publicly disclose all classified contracts in a ruling in May this year upholding an earlier ruling by the High Court.

The Transport Ministry had made partial disclosures in 2022 following a high court ruling then. It is however yet to comply with the Court of Appeal ruling that dismissed the government's concerns about national security and possible fallout with China.

Other concerns that have kept popping up include what petitioners in court documents termed as flawed procurement process through which the government single sourced CRBC that was later declared unconstitutional by the Court of Appeal.

The project has also been criticised as failing the long-term sustainability test, largely on account of its termination at Naivasha as well as government directives that forced cargo owners to use the railway.

Additionally, the project sparked public backlash for cutting directly through Nairobi National Park.

In its operational phase, the SGR operator Afristar – a subsidiary of CRBC – has been accused of inhumane treatment of workers but also labour discrimination against Kenyan workers by foreign managers.

Afristar was also expected to hand over operations of the SGR to Kenya Railways in 2022 but this has not happened.

These controversies are at the centre of a recently filed constitutional petition that is seeking the removal of Kenya Railways Managing Director Phillip Mainga from office for failing to ensure transparency during implementation of the initial two phases of SGR.

The petition, filed by Wahome Mucunu, faults Kenya Railways for failure to disclose SGR contracts, loan agreements, engineering feasibility studies and project appraisal reports, which he noted is unconstitutional.

The historical issues that have over the years seen Kenyans troop to court to demand answers are now triggering preemptive legal resistance for the extension of the project.

In a petition filed at a Kisumu court in March this year, lawyer Francis Owino noted that the government had failed to make any disclosures “concerning loan conditions, repayment structures, currency exposure risks or default consequences associated with the project”. 

“The project threatens to repeat historical patterns where infrastructure investments are undertaken without demonstrable economic return, thereby creating public assets financed through sovereign borrowing,” Owino had said in the petition.

He had also noted that despite the magnitude of the project and its far reaching social, environmental and economic consequences, “the respondents (Kenya Railways and Transport Ministry) have proceeded in secrecy and without adherence to mandatory constitutional safeguards governing transparency, accountability, public participation, environmental protection and responsible public finance management”.

“The secrecy surrounding the financing model exposes the Republic to contingent liabilities whose magnitude remains unknown to Parliament, affected communities and the public. There exists no publicly verifiable procurement process demonstrating compliance with Article 227 of the Constitution requiring fairness, equity, transparency, competitiveness and cost effectiveness in public procurement,” said Owino in his petition.

Among the disclosures that Owino sought included the engineering contracts, concession agreements, financial arrangements or risk allocation matrices. Other documents included value for money assessments or comparative economic justification.

In addition to transparency concerns raised about the project that will extend the SR to Kisumu and Malaba, it is expected to further plunge the country deeper into debt.

In the June report, TI demonstrates how expensive the first two legs of SGR have become.

“The cost and value of the project was way above - Phase 1 cost Sh490.92 billion, 90 per cent of which was funded through Chinese loans. Phase 2A, which extended the line to Naivasha, was completed at a cost of Sh193.78 billion. As of November 2024, the original Sh539 billion loan borrowed for the SGR phase 1 and 2 have ballooned to Sh737.5 billion to interest accrued from non-payment. The cost is too much for a struggling country,” said TI.

The government has said it will avoid taking direct debts but instead use what it terms as innovative financing modalities that include securitisation, which allows the government to borrow using future taxes as collateral and which critics have termed as debt by another name. A recently enacted law allows the government to securitise 90 per cent of the money going into the Railway Development Levy (RDL) Fund.

Treasury has in the past said it planned to raise Sh387 billion by securitising the levy, with the funds going to partly fund the expansion of the SGR to Kisumu and Malaba. According to TI, the move to borrow Sh387 billion using the levy as collateral signals the unwillingness of China to finance the project.

The report also recommended contractual transparency, compliance with independent oversight and robust public participation before any further construction or financing agreements are finalised.

“Government entities implementing infrastructure projects should proactively publish all project selection documents, final contract agreement and progress implementation to ensure Public Investment Management (PIM) processes are comprehensive, transparent and accountable,” said TI.